Government loses appeal over solar subsidy cuts

Homeowners who install solar panels before 3 March can get higher payments for generating electricity, after the Court of Appeal upheld a ruling that the Government's subsidy cuts were unlawful.

The Department for Energy and Climate Change planned to halve the feed-in tariff, which pays people to generate electricity, for anyone who installed and registered after 12 December, even though the consultation on the plans ran until 23 December.

Three appeal judges rejected the Government's challenge to a High Court ruling that it was unlawful to make retrospective changes to the feed-in tariff.

The feed-in will now be cut by just over half from 1 April 2012 for panels installed and registered after the new deadline of 3 March. Those who already have panels keep the high rate (full rate info below).

A Department for Energy and Climate Change spokesperson says the Government is considering its options, which include seeking permission to appeal to the Supreme Court.

How solar panels can pay

Solar panels can save the typical home £90-£180/year in electricity, according to the Energy Saving Trust. However, the real draw is the Government guarantees that for 25 years you'll get a 'feed-in tariff' which means you're paid to generate energy, even if you use it yourself.

Over 25 years, these gains are extremely lucrative. The feed-in tariff scheme could pay back double your spend if you install before 3 March. For example, a £12,000 system would net £27,500 over 25 years.

Donna Hume of charity Friends of the Earth says: "Even with the changes, solar will still represent a good investment for many people. It allows households to continue to make money from the sun – and frees them from increasingly expensive fossil fuels and a stitched-up energy market dominated by the big six.

"However, a cloud of uncertainty still hangs over the financial viability of the entire scheme. If ministers want to protect jobs and enable more people to switch to clean power, they must come up with more money to finance the scheme."

What will I get paid?

Install before 3 March. Feed-in payments will be 43.3p per kWh.

Install on 3 March or later. Payments will be 21p per kWh, slashing typical earnings and savings from £1,190 to £640 a year.

Can people sign up and install before the deadline?

It is unlikely that people will be able to sign up and install before 3 March, as ordering and fitting panels usually takes two months.

Those who have already ordered panels that are still being fitted could benefit. However, not only must panels be fitted by 3 March, but the energy supplier must also have received a 'Microgeneration Certification Scheme' certificate by then, which only valid once the system is working. These homeowners should urgently talk over their options with their installer.

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